Markets

Progress of monsoon, inflation prints, IIP among 7 factors that will steer market next week

NEW DELHI: RBIs rate cut and change of policy stance failed to give domestic equity market any impetus during the week gone by, as the market got disappointed because of the absence of any measure to address the liquidity issue haunting NBFCs.

Weak global sentiments and subdued macroeconomic indicators have added to the bearish mood. The US threats to impose tariffs on more trading partners; a slippage in India's GDP growth to 5.8 per cent in January-March period, its slowest pace in 17 quarters, dented investor sentiment.

Even though equity benchmarks Sensex and Nifty ended Fridays session in the green, both suffered losses on a weekly basis, breaking the winning streak of three consecutive weeks.

Going into a new week, global cues, flow of foreign funds and movement of crude oil prices will have their sway on the market. Investors will be watching the inflation print due earlier in the week.

Let's take a look at the factors that will impact the market in the week ahead:

Progress of monsoon
Delayed by a week, annual monsoon officially arrived on the coast of Kerala on Saturday. The seasonal wind, which delivers about 70-75 per cent of the countrys rainfall, has a larger impact on the Indian economy, as almost half of India's farmland depends on it for irrigation. The rainfall is expected to be average as projected by the India Meteorological Department (IMD). In the days to come, the progress of monsoon will remain a key monitorable for the market.

Inflation prints
India's retail and wholesale inflation prints for May will be released on Wednesday and Friday, respectively. RBI, in its last monetary policy meet, raised retail inflation forecast marginally to 3-3.1 per cent for the first half and 3.4-3.7 per cent for the second half of this financial year. If the coming inflation data conforms to RBI's estimates, hope of yet another rate cut will be bolstered.

IIP data for April
India's industrial production data for April will be released on Wednesday. The country's industrial output declined by 0.1 per cent in March, hitting a 21-month low, due to a contraction in manufacturing, capital goods and consumer durables. Manufacturing, which constitutes 77.63 per cent of the Index of Industrial Production (IIP), shrank 0.4 per cent in the month. The market will take a close look at this significant indicator of the country's economic health.

Global sentiment
Trade war and indicators of a global economic slowdown are fanning worries of an approaching recession. As per Reuters, US job growth slowed sharply in May and wages rose less than expected, raising fears that a loss of momentum in economic activity could be spreading to the labour market, which could put pressure on the Federal Reserve to cut interest rates this year. Markets across the globe will closely observe Japan's first quarter GDP numbers and inflation prints of China and the US in the coming week. Besides, China's trade balance data for May and the US retail sales data will tell more about the direction of the world economy.

Flow of foreign money
June so far has seen the continuation of bullish stance of foreign portfolio investors (FPIs) on the Indian market. As per available data with NSDL, FPIs have pumped in Rs 7,095 crore into Indian debt and equity markets in June so far. However last Friday, when the market ended marginally higher, FPIs took out Rs 478.84 crore, NSE data showed. The flow of foreign funds will remain an importantRead More – Source
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